Effects of the Great Depression

1. Effects of the Great Depression

2. 1. Less Purchasing by Everyone • As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. • More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation. reposessed

3. 2. High Unemployment • Generally 25% in industrialized countries • With no “safety nets”, effects on individuals severe • Led to decline in demand for goods, which caused the depression to deepen Unemployment skyrocketed

4. 3. Banking Failures & Closures • Banks use money deposited by clients to provide loans to businesses and farms • After stock market crash - businesses and farms who owed $$ to banks went bankrupt • Bank deposits were uninsured and thus as banks failed people simply lost their savings • Surviving banks, unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans. This exacerbated the situation leading to less and less expenditures. • In USA – over 9,000 banking failures • In Canada - most banks survived, but were strongly affected by US

5. 4. Massive Poverty

6. 5. Homelessness

7. 6. Emotional Depression • At this time, men were expected to support their families financially • suffered anxiety and a feeling of worthlessness for failing to provide for their families • Many, driven by desperation, resorted to stealing food and money just to get by • Many distressed fathers...committed suicide during this difficult decade[1930s]

8. 7. Immigration Rates Fall • Immigration in Canada dropped from 164,993 people in 1929 to 11,277 in 1935

9. 8. Farmers & Drought • The depression was devastating to Canadian farmers • In western Canada prolonged drought, compounded by years of poor soil conservation techniques, devastated vast areas of farmland in southeastern Alberta, southern Saskatchewan, and southwestern Manitoba • Thousands of farmers abandoned their lands to the drifting soil and moved west to British Columbia

10. 9. Political Consequences • In some countries, such as Germany, their democracy did not survive the Great Depression (rise of fascism) • In Canada – new political parties formed in reaction to the government’s inability to address the problems of the Depression • Examples: The Canadian Cooperative Federation (CCF – later – NDP), the Social Credit Party in Alberta, and the Union Nationale in Quebec Nazism = Fascism

11. Cooperative Commonwealth Federation (CCF) • first leader was J.S. Woodsworth, a sensitive man and devout Christian who held strong opinions on helping the less fortunate • founded in Calgary in 1932 by a coalition of farmers, academics and Ottawa MPs associated with farmer & trade-union organizations

12. CCF cont’ • produced the “Regina Manifesto” in 1933, calling for the creation of a political vehicle that would rescue Canada from the Depression • promised unemployment & health insurance, public housing, agricultural price supports, laws to protect farmers from creditors & public ownership of major industries and financial institutions (SOCIALIST policies)

13. CCF cont’ • Later, on June 15, 1944 the provincial CCF, led by Tommy Douglas, won Saskatchewan to form North America’s first socialist government • King and his party responded to the CCF’s success by adopting some of the party’s most popular policies, cutting off “the threat on the left” and initiating the federal government’s involvement in social and economic affairs • The Liberals hoped to prevent a post-war Depression and in the process laid the foundation for Canada’s welfare state • Old Age Pension plan, • unemployment-insurance scheme (1940) • system of family allowances (1944) • promoted policies to support home building, find work for demobilized war vets and increase federal assistance to health care

14. 10 b. Social Credit Party “Give each citizen a monthly $25 prosperity certificate, guaranteed by the government, to spend on food, clothing, and shelter.” - William Aberhart

15. Social Credit cont’ • advocated the distribution of money, or "social credit," so that people might purchase the goods and services readily produced by capitalist enterprise • in 1932 Alberta evangelist William ABERHART used his radio program to encourage other Albertans to adopt social credit as the means of rescuing the province and Canada from the drastic effects of the GREAT DEPRESSION

16. 11. Changing Role of Government • Before the Great Depression, governments generally responded to economic downturns by “tightening their belts” and cutting back on government spending until it matched revenues

17. Changing Role of Gov. cont’ • Soon realized that government would have to take a more active role in caring for the poor • Unemployment benefits, sick benefits, child benefits, welfare, etc. all directly or indirectly originated during the depression = basis of modern social safety net

18. Gov Role cont’ • Ever since the Great Depression, national economies have been strictly controlled by elected governments • Citizens expect governments to manage the economy through: • tax policy (increasing & decreasing taxes), • monetary policy (raising & lowering interest rates), and • fiscal policy (increasing and decreasing government expenditures)

19. Responses to the Great Depression

20. Why Attempts often Failed • At the beginning of the Depression, no one foresaw that it would be as bad as it was for as long as it was • No one realized the extent to which national economies had become international and connected in nature • Any solution to such a large problem needed to be radical – and democratic governments hesitated in doing anything drastic

21. A. USA’s Attempts • President Hoover did not implement any relief measures at the beginning of the Depression • President Roosevelt was elected in 1933 and introduced the “New Deal”, which was a set of relief programs designed to put Americans back to work

22. A. 1) USA – Keynesian Economics Keynes – British economist who proposed radical solutions • Proposed that governments should spend their way out of the Depression

23. 1) Keynesian Economics cont’ • Proposed: deficit financing • governments should borrow money, to be repaid in the future when the economy recovered, and spend it on huge employment projects • Employment projects – to improve / modernize the infrastructure such as building roads, bridges, dams, etc. Bonneville Dam on Columbia River

24. B. Canada’s Attempts

25. 1) Initial Government Response to Depression • Federal & provincial governments largely downloaded the responsibility of providing relief to the municipalities – but they did not have the resources to deal with it • PM Mackenzie King – unwilling to deal with the Depression – said he would not give Conservative provincial governments “a five cent piece” to help them deal with unemployment

26. 2) Citizens’ Response – Riding the Rails • Unemployed men took to “Riding the rails” – hitching a ride on freight trains by trying to ride on top of cars / inside cars (if they could get in) to travel across country to find work • Police tried to arrest transients for “vagrancy”, but this did little to stop them

27. 2) Government Response = Pogey/ Dole • “Pogey” or “the dole” – similar to modern-day welfare system • Assistance in the form of money received from the state • Deliberately kept lower than lowest paying jobs to discourage people from wanting to be on it

28. 3) Government Response = Vouchers • A piece of paper that entitles the holder to a discount, or that can be exchanged for goods and services • Government program that provided vouchers to people who qualified to get: • Food • Other essential items • Sometimes rent and fuel

29. 2 & 3) Pogey / Vouchers - Results • Brought in too late to be of much help • Too many restrictions placed upon it • Because so little, people ended up starving and suffering from disease • Dole did help out those who received it

30. 2 & 3) Pogey /Vouchers - Results • rationed sparingly – not enough people received them • hardly able to survive on what was given • humiliating to live on $10 per month while some were living the high life • Many people, especially single men, had to resort to eating at Soup kitchens Soup kitchen

31. 4) Government Response = Unemployment Relief Camps – • 1930 – R.B. Bennett (Conservative) became PM • Set up Unemployment Relief Camps for single, unemployed men • Sent to camps in wilderness under military authority • Men laboured on public works projects such as building roads, for 20 cents a day, plus room and board

32. 4) Relief Camps - Results • Way of dealing with “riding the rails”, and did succeed in getting men off the street • Humiliating – men felt de-humanized, hidden away and forgotten • Restrictive – no freedom of mobility in and out of camps • not productive - able-bodied men could have been used for more productive purposes; Work projects were useless, futile in many cases.

33. 4) Relief Camps Results cont’ • Hotbed of discontent – men plotted ways of making the government accountable for the Depression, which led to: • the On-to-Ottawa Trek and • the Regina Riot • The fact that some people would accept the conditions of the camps just to have a place to live shows us how desperate they were. • isolation of camps – kept men away from their families & loved ones

34. 5) High Tariffs • PM Bennett – set up high tariffs to protect Canadian industries (*see “Causes” ) • Thought other countries would lower their tariffs because they would need Canada’s staple products (*see “Causes”), but by 1935, only Britain had lowered its tariffs, so the plan back-fired tariffs trade

35. 5) Tariffs - Results • Had opposite effect • showed lack of understanding of global economic forces – economy of Canada too closely tied to foreign markets for Tariffs to be helpful • income tax was increased as a result

36. 6) Bennett’s New Deal - 1935 • Inspired by Roosevelt’s “New Deal” - PM Bennett introduced his own version: 1.Progressive taxation (the more you make, the more you pay ) 2. Maximum number of hours in a work week 3. Introduction of minimum wage • Federal government could not enforce 2 & 3 since Provinces were responsible for enforcing employment practices

37. 6) Bennett’s New Deal con’t 4. Stronger regulation of working conditions 5. Unemployment Insurance 6. Health and accident insurance 7. Revised old age pension plan 8. Agricultural support; and 9. A marketing board to regulate wheat prices

38. New Deal Outcome • 6 of the 8 statutes were invalidated by the Judicial Committee of the Privy Council (1937) because they deemed the laws outside of the federal government’s power • Only the Farmers Creditor's Arrangement Act (which resulted in the Wheat Board) and section 498A of the Criminal Code (dealing with unfair trade practices) were allowed to stand

39. 6) New Deal - Results • Most of these ideas now make up our modern-day “social safety net” • Benefits aimed at helping individuals and businesses in times of economic crisis • Unfortunately: TOO LITTLE, TOO LATE • Did little to help with unemployment • 1935 the CANADIAN WHEAT BOARD was created to market and establish a minimum floor price for wheat Social safety

40. 7) On-to Ottawa Trek & Regina Riot On-to Ottawa Trek • June, 1935 – thousands of relief camp workers, embittered by their experience & frustration, boarded trains in Vancouver bound for Ottawa

41. 7) On-to- Ottawa Trek • Protest gathered strength as it crossed the country • Workers wanted: • Work with wages • Real jobs

42. 7) Regina Riot • “trekkers” stopped in Regina by RCMP – riot broke out • Dozens injured and one officer beaten to death

43. 7) Regina Riot – cont’ • Only one striker met with Bennett – but nothing came of it • People turned against Bennett, and in 1935, re-elected Mackenzie-King as Prime Minister

44. 8) Diversion • People sought to escape their economic woes – One case: • In 1934 – in North bay, Ontario - Dionne Quintuplets (5 babies) were the 1st to live for more than just a few days • Soon after birth – government took over the welfare of the Quints

45. 8) Quints cont’ • Sent to a nursery / hospital where they were cared for by a special team of doctors and nurses

46. 8) Quints con’t • Quints rarely saw their parents or other siblings • Constantly tested and observed • Ontario gov. eventually built a road to the nursery so tourists could watch the Quints play • Estimated that generated over $500 million in tourist dollars • After 9 year battle, Quints finally returned to family • In 1998, the Ontarian government gave the Dionnes a settlement of $4 million CDN. Dionne Family Home Tourist attraction

47. Overall Government Responses = Unsuccessful • Government experimented; did try options to alleviate poor economic conditions. • Prior experience was not available to draw upon. • Other countries were doing similar things, so they did the best they could. • Federal government did bail the provinces out with relief money ($20 million to provinces). • put people to work • In 1931, when they finally gave emergency relief, the Depression had already been in full swing for three years.

48. Responses & Results - Overall • Growth of “Protest Parties” (third parties) such as the CCF showed the naïveté of the federal government which seemed to have had no idea how desperate rural Canadians were. • adopted a plan in 1939 for “arsenal of democracy” to help put people back to work • Ultimately, the production of goods and weapons for WWII ended the Depression for Canadians.